Canada’s fat-cat bank CEOs make millions while workers struggle

No one likes participating in games where the winner takes all. It’s why poker tables get flipped in anger. Winner-take-all systems are not only unfair but also demoralizing for everyone but the winner.

When reports emerge on the "great resignation" or “quiet quitting” and workers rally behind hashtags such as #ActYourWage, it's obvious they are demoralized. When it’s estimated that in one year a Canadian bank CEO is paid what it would take a bank worker making a median wage 112 years to earn, it’s a winner-take-all pay system. And the clear winner is the CEO being paid $11.2 million a year.

Bank of Montreal’s CEO was paid $11.2 million in 2023, the bank’s financial statements reveal. What’s not disclosed is the gap between the CEO pay and the salary of its median worker. A median worker represents the employee whose income falls exactly in the middle of the employee earnings spectrum. This means that half of employees make more than the median worker and half less.

Vancity Investment Management (VCIM), using its shareholder status at the Bank of Montreal’s AGM on April 16, wants the bank to reveal publicly what it pays its CEO compared to its salaried workers. VCIM has similar proposals at the AGMs for the Canadian Imperial Bank of Commerce (CEO paid $10.7 million), Royal Bank (CEO paid $15.2 million), and TD Canada Trust (CEO paid $13.4 million). Scotiabank, after a similar proposal from Vancity, acknowledged the value of the CEO wage-ratio disclosure and began publicly reporting the information last year.

The publication of the CEO-to-median worker pay ratio is an important way for investors to hold companies accountable and ensure profits are shared among all employees. A colossal gap between what the CEO is paid compared to the average worker signals a corporate culture that prioritizes a winner-takes-all mindset and is a major contributor to economic inequality.

Financial institutions, like most companies, don’t operate in a vacuum; they rely on the value of their workers. In a healthy, inclusive economy, a company considers how profits are managed and distributed. However, at the banks, the average workers watch their diminishing purchasing power in an economy of inflation, while the CEOs continue to increase their earnings.

When the CEO wage gap isn’t transparent, it’s more likely to escalate. The Canadian Centre for Policy Alternatives, which has tracked CEO compensation in Canada since 2008, reported earlier this year that over the past decade, the richest CEOs have gone from making 155 times to 243 times as much as the average worker. In two days, the top CEOs have already made what the average worker would earn for the entire year.

Vancity Credit Union, the parent company of VCIM, is a living wage employer and has made its CEO-to-employee pay ratio (currently 8-to-1) public for years.

In the aftermath of the 2008 financial crisis, the U.S. implemented the Dodd-Frank Act, which included regulations for banks and all publicly traded corporations to disclose the ratio of the median worker’s income to the CEO’s income in their shareholder information before their annual meeting.

For U.K. companies with more than 250 employees, it’s mandatory to publicly disclose the pay ratio between the CEO and employees.

There are well-defined frameworks for calculating the ratio between CEO and worker median pay. This is not a big ask of Canada’s largest financial institutions.

Kelly Hirsch is the head of ESG for Vancity Investment Management (VCIM), which leverages its influence as a conscientious shareholder to advance environmental sustainability, social responsibility and good governance. VCIM is filing proposals with the Bank of Montreal, RBC, TD and CIBC at their April AGMs to push for CEO to median worker pay disclosure.